Is Online Banking Safe?

Online banking is a phenomenon that has grown in the last decade. However, many people question its safety. In this day and age of information and identity theft, consumers can take steps to minimize their exposure to Internet crime, while banks also move to strengthen their defenses. As Internet banking becomes a way of life, the industry is adjusting to the growing needs of its consumers by coming up with better ways to ensure security.

Function

Most banks in the United States offer an online banking interface for account holders. Online banking allows many tasks that were restricted to daytime banking hours. Customers can work on transferring funds, opening additional accounts and making loan payments. In an effort to add more value to their online services, many banks also offer bill payment and free account-to-account transfers. These services have increased the convenience of banking, and they have changed the world of finance.

Online banking is safe as long as consumers are smart and vigilant. Banks often have a vigorous system in place to guard access. Some methods include virtual keypads, numerous password stages and photo identifiers. In addition, banks guarantee losses due to theft. Banks return the money within 24 hours of a report in some cases. These steps, combined with state-of-the-art technology and encryption, keep most consumers safe.

Considerations

However, people have concerns about the safety of online banking. While the ease of use and ready accessibility are very attractive, there is no escaping the reality of Internet crime. Users and banks constantly keep safety and confidentiality in mind. That's important because identity thefts are on the rise.

When thinking about online banking safety, consumers also must realize that security is a two-way street. With the fast development of robust black market information trade, it's important to be careful with personal information. While banks develop new tools to stay secure, customers must be vigilant and take their own steps to ensure privacy.

Prevention/Solution

To minimize online banking mishaps, there are basic steps that a customer should follow when using Internet banking tools. First, restrict online banking visits to personal computers in the home. It takes only one improper or incomplete log-off at a public computer for an account to be at risk. After a session, close out the browser and restart it. For thorough protection, run anti-virus software permanently, and an ad software sweeper such as Ad-Aware once every two weeks. These few steps will heavily cut your chances of malicious software or hackers getting your account information.

For even more protection against unauthorized activity, don't use credit or debit cards for Internet buying. Instead, use a program like the Paypal plug-in, which supplies a "virtual debit card" for transactions. The card number expires immediately after processing, destroying any link back to your account.

Benefits

Though online banking has vulnerabilities, it also has many pluses. Convenience is number one. The ability to check financial records and drafts 24 hours a day makes it easier to avoid bounces. It's also simpler to spot bank mistakes quickly, avoiding time lapses that may hurt any chances of a fix. Users can also access scans of canceled checks through some banking Websites.

Many banks also have extra services, classes and information for customers. Taking just an hour to explore a banking Website can yield some wonderful information. For instance, ING Direct hosts free online classes with an archive of events. These classes--centered around personal finance--offer great insight into money management that you wouldn't get from the traditional banking experience.

Potential

Online banking is growing in leaps and bounds. Many banks now offer insurance products and brokerage services through the Internet. As financial institutions merge, they gain the ability to offer new services to consumers. ING Direct's purchase of ShareBuilder has simplified investing for ING account holders. There's no need to take time entering account information or waiting for transfers.

Since the Internet has become a necessary part of everyday life, it makes sense that the relationship between personal finance and technology is increasing. As it does, more home users will have the opportunity to raise their financial acumen without feeling intimidated by the world of money. With banks doing all they can to increase security and lessen risk, users can may expect increased safety and quality in the future.

Resources

• FDIC: Safe Internet Banking